UPDATE 1-US House panel backs financial consumer watchdog

* Scope of proposed agency pared back in committee

* Auto dealers exempted from agency oversight

* Full House vote not expected until November

* Senate outlook for Obama financial reforms unclear (Adds bill details, vote tally, background)

WASHINGTON, Oct 22 (Reuters) - A key U.S. congressional committee on Thursday voted to support creation of a Consumer Financial Protection Agency, approving legislation that had been pared back from an Obama administration proposal.

The agency is a central part of President Barack Obama's sweeping plan to tighten bank and market regulation after the worst financial crisis in generations. It would regulate mortgages, credit cards and many other financial products.

The House of Representatives Financial Services Committee backed the bill by a 39-29 vote after exempting credit, mortgage and title insurers as well as auto dealers and many other businesses from the proposed agency's oversight.

Small banks were partially exempted. Also dropped was an Obama provision that would require banks to offer such products as 30-year, fixed-rate mortgages.

In addition, the committee softened an administration provision that would give state governments wide latitude to write and enforce consumer protection rules that are tougher than the CFPA's.

States still could do that, under the committee's bill, but federal regulators could block state rules if they were found to "significantly interfere" with a national bank's business.

A vote in the full House on the CFPA proposal was not expected until mid-November at the earliest. The Senate was unlikely to take final action on the measure, as well as other proposed financial reforms, until 2010. (Reporting by Kevin Drawbaugh and Rachelle Younglai)